2018: Our Year of Debt-Freedom

As I looked ahead to our journey out of debt in May of 2012, I wrote, “According to my rough calculations, it will take just over five years for us to get there. But I’m not very good at math, and I know that the unexpected will happen, so I’m not committed to the timing – just the direction of the journey: out of debt.”

We’ve been following Dave Ramsey’s steps to debt-freedom, and in his book The Total Money Makeover, Ramsey says it takes the average household seven years to get there. As we progressed along our debt-repayment in those first couple of years, it became clear that we were falling in line with that 7-year average. Our projected debt-freedom date: June 2019.

Our progress as of December 2017:

Consumer Debt – Paid

Business Debt – Paid

Mortgage Debt – $60,000

Total Debt – $60,000

Emergency Fund – Full

Investments – Happening on a regular monthly basis

Inheritance

My mom passed away in November. I remember how heartened and relieved she was when DH and I became focused on debt-reduction. She and my dad (who passed away in 2007) had always been frugal and money-wise, and my many years of financial mismanagement had bewildered and often frustrated them. Our turn-around was of satisfying significance to Mom, and she cheered us on. My sister who lives out west told me that when she would talk with Mom on the phone, Mom would often happily share our debt-reduction progress as part of her newsworthy family updates. I don’t think we ever get too old to enjoy making our parents proud, and a big part of the encouragement I’ve felt over the years in watching our debt numbers drop was in knowing how pleased my mom was about it.

So I write this next part with mixed feelings. The inheritance that I am receiving will move our date of debt-freedom up by about 8 months. Instead of June 2019, it will likely be September 2018.

We can put one lump sum against our mortgage once per year to a maximum of $18,000, and while we had planned to take advantage of that option for 2017, we had no illusions about being able to make the maximum payment. But we have. So to update our update:

Mortgage Debt – $42,000

Total Debt – $42,000

Of course I’m grateful. Of course it wouldn’t be this way if I had the choice.

Resolutions for 2018

No mortgage penalty

We’re not going to wipe out the mortgage and incur a penalty – no need to waste a cent going that route. We’ll put another maximum lump sum down and pay off the balance with regular monthly payments. That intention in itself is an indication of how far I’ve come. Impatience was a major root of the financial chaos in which I operated for years, and for me, it has been the biggest challenge of our journey out of debt. But I’m not giving in to it. The wisest thing to do is to take our time, pay off the mortgage without penalty, and invest the rest. So that’s what we’re doing.

The moving plank analogy

A less S.M.A.R.T goal that I have is to fine-tune the self-discipline that I’ve been building over these last 5 years. For 2016, my resolution involved a planking analogy. At the end of 2015, we had recently finished Ramsey’s Step #2 (pay off all non-mortgage debt), and were adjusting to steps #3 and #4 (save a big emergency fund and invest regularly). I had found the change difficult. For me, it was more satisfying to attack the debt full-on, with no diversions into savings and investments. I wrote: “I need the core strength – the stability and balance – of patience in my approach to our shifted financial goals. Muscles in the human pelvis, lower back, hips and abdomen ideally work in harmony. Efforts towards our savings, investments, mortgage payments, and giving can also progress towards an ideal of harmony. No rush. Slow, steady, progress. Balance. Stability. Just breathe, and hold a little longer … like a plank.”

At the end of 2016, I managed to hold a 5-minute plank. And DH and I also succeeded in reaching a strong, steady habit of saving and investing as well as paying off debt. But I’ve learned something about planking: It’s much better to vary your planking position every 10-30 seconds than it is to hold a single position for several minutes. And I’d like to work that concept into the new steadiness of our personal finances.

I’d like to take another step away from the “all-or-nothing” financial compulsion that I’ve always had. This compulsion has moved from spending-max-out to intensive-debt-payoff to strictly-budgeted-savings/investments/mortgage-payments. The moves have been made in the right direction, and we have healthier finances as a result. But now, while I want the same level of strength, I also want more flexibility – less “strict”. No surrender to chaos, but more ebb and flow within a strong, steady effort. Less set-in-stone, and more room to adjust … like a moving plank.

So looking forward to the debt-free milestone for your family. I”m sure your mom watching over is proud to know she help shorten the journey. No matter what stage of the debt freedom journey you are, it certainly takes work, consistent check-ins, if not its easy for old habits to slip back in. That’s our goal for this year, avoiding old bad habits, and making sure our new good habits don’t become too routine.

Ah! I got weepy reading that, Brian. And you’re right – she would be glad to know that our journey has been shortened. I like your NY resolution. I understand the “making sure new good habits don’t become too routine” part. All the best for the New Year!

Receiving an inheritance is truly a mixed blessing. Your mom will smile as you put yours to good use, reaping the rewards of your fiscal diligence in 2018 – amazing! As per Dave Ramsay’s protocol, I hope to see a picture of you whooping it up on your backyard grass 🙂

Thanks, Nancy. You are right in saying my mom – and dad – would be pleased to see us putting it to good use. And that is of some comfort : ) As for whooping it up Ramsey-style with bare feet on the backyard grass … I don’t see it, given the reason for the quicker debt repayment. Then again, there will be at least two people in heaven whooping it up when that day comes …

I’m glad that you’re able to use your inheritance to do something that your mom would approve of. It’s always difficult losing someone you love and its easy for an inheritance to make you feel guilty. I got a small inheritance from my grandparents this year and am using most of it to boost my charitable giving because I know that giving to the less fortunate was important to my grandmother.

I very much agree with the goal of moving towards a less strict mindset. I think we often need to be strict at the start in order to build good habits and correct for previous mistakes, but it feels good to put it on cruise control and destress a little bit.

Thanks, Matt. You are right in saying that there is some guilt attached here – but I’m letting it go and allowing myself to move forward in a direction that you are right in saying my mom would approve of. A direction, as it turns out, that will bring me closer to where you are already. That is truly a wonderful use of your inheritance from your grandparents. As for the “strict” bit, I too see it as a necessary first step, but it’s not the destination I want.

A 5-minute plank?!?!? Dang that is NOT an easy thing to achieve! I’m sure that that lump sum of money was very conflicting, but I’m so glad it can HELP you in some way achieve your own dreams! I’m sure your mom would have been happy with your choice! Hope you have a spectacular 2018!

Thank you, Tonya. And yes, I’m happy to know that my mom would be pleased with our choice to max out on the lump sum against the mortgage. As for the plank, I did just one 5-minute plank at the end of 2016, and it was HARD. With my moving plank, I’m going to see how long I can hold it. Stay tuned! And have a spectacular 2018 too : )

I’m sure she was thrilled to know that she would be able to help you a bit after she was gone, rather than inadvertently derailing you, as she might have worried if you hadn’t shown her that you were working hard at debt reduction in her last years. As someone whose family struggles to make good financial choices, I make a lot of “if I weren’t here” choices to make sure that they don’t come into a windfall that makes things worse in the end because without good habits, windfalls aren’t good things.

Thank you, Revanche. “without good habits, windfalls aren’t good things.” You are absolutely right about that. I know a couple of people who received early inheritances, and it hasn’t gone well. That could have been me, as I certainly didn’t have good habits when I was young (not to mention not-so-young). I’m very grateful to have had my wake-up call when I did. And I’m glad I got to witness my mom’s relief at the change.

I’m so happy for you guys! You’ve worked really hard for this, and to think in less than a year you’ll be there…

I’m sorry to hear about your mom. I am glad she was able to take such joy in your achievement, though. Making her proud INDEED.

It’s so smart of you to wait on the mortgage, too–and to recognize the impulse to get it DONE for what it is. Too often I think we focus on getting out of our “hole” rather than focusing on the behaviors that dug that hole in the first place. You’re super wise!

Thank you, Femme! I have to laugh at “You’re super wise” though. I think the wisest thing we’ve done is to take ownership of our mess and to be transparent about what we each did to contribute to it. So I guess that makes me wise for owning my foolishness : )

Although it isn’t happening the way you had planned, paying down your mortgage with the money you received is still quite an accomplishment. You guys have come so far in your debt-repayment journey which is so awesome! I love that your mom was super proud of you and your journey to get out of debt 🙂

So awesome that you can reach this long-term goal this year! It drives me nuts that banks charge penalties for early mortgage payoff, but there’s nothing for it, and it’s a good problem to have. Sounds like a slow, balanced approach is perfect especially considering your current finances. Congrats!